Covering Fourth Quarter 2019 Volume 20, Number 1 San …

Covering Fourth Quarter 2019

San Diego Auto Outlook

Comprehensive information on the San Diego County new vehicle market

Volume 20, Number 1

FORECAST

New Vehicle Market Predicted to Decline Slightly in 2020

Below is a summary of eight key trends and developments in the San Diego County new vehicle market.

County new retail light vehicle registrations exceeded 141,000 units in 2019 The new vehicle market fell by 5.5% last year. Despite the decline, 2019 marked the seventh consecutive year that new registrations exceeded 130,000 units, which is a very respectable total for the County market.

New vehicle sales likely to soften in 2020 The gradual market slowdown that has been ongoing for the past three years should extend into 2020. Affordability is currently the biggest drag on new vehicle sales. Vehicle prices are increasing, interest rates are likely to hold steady, and household incomes are struggling to keep pace.

Trucks grab a larger share of county market Light truck market share increased from 38.3% in 2012 to 60.8% in 2019.

Alternative powertrain market improves County registrations of hybrid and electric cars and trucks increased 6% during the first 11 months of 2019, while the overall market was down for the entire year.

Toyota, Honda, Ford, Chevrolet, and Nissan are leaders in county market Toyota was the best selling brand last year, with an 18.3% share. Honda's county share was 12.3%, well above its 10.4% share in the U.S.

Genesis, Ram, Porsche, Tesla, and Hyundai posted gains New retail registrations for each of these five brands were up more than 2% from 2018 to 2019.

Honda Civic best-selling car in county market; Toyota RAV4 is light truck leader Tesla Model 3 and Toyota Corolla were ranked second and third behind Civic in the car market, while Ford F-Series and Honda CR-V trailed the RAV4.

Non Luxury SUVs account for 35% of market Market share for Non Luxury SUVs increased to 35% during the first eleven months of last year. Small Car market share has fallen by more than ten points during the past three years.

Percent Change in County Light Truck and Car Registrations

2019* vs. 2018

Light Trucks (Pickups, SUVs, and Vans)

DOUWP N 80.14%

Passenger Cars

DOWN 142.26%

Source: IHS.

*Dec. 19 estimated.

Annual Trend in County Market

Market Summary

New light vehicle registrations

180,000 160,000 140,000 120,000 100,000

80,000 60,000 40,000 20,000

0

146844 161240 162239 157070 149793 141493 135500

2014 2015 2016 2017 2018 2019* 2020 Forecast

Historical Data Source: IHS.

The graph above shows annual new retail light vehicle registrations in the county from 2014 thru 2019 and Auto Outlook's projection for 2020.

TOTAL

Car Light Truck

Domestic European Japanese Korean

2018 Annual 149,793

63,491 86,302

41,874 22,746 73,694 11,479

2019* % Chg. Annual '18 to '19 141,493 -5.5%

Mkt. Share 2019*

55,512 85,981

-12.6% -0.4%

39.2% 60.8%

38,196 22,045 69,801 11,451

-8.8% -3.1% -5.3% -0.2%

27.0% 15.6% 49.3%

8.1%

Source: IHS.

Domestics consist of vehicles sold by GM, Ford, FCA (excluding Alfa and FIAT), and Tesla. Historical figures were revised by IHS Markit and will differ slightly from those shown in previous releases. *Figures for Dec. `19 were estimated by Auto Outlook.

Page 2

San Diego Auto Outlook

MARKET TRACKER: QUARTERLY RESULTS

County and U.S. Markets Post Similar Results in 4Q `19

QUARTERLY TREND Percent Change in County and U.S. New Vehicle Market

QUARTERLY PERSPECTIVE 4Q 2019 Registrations Versus Average for Previous Five Years

% change versus year earlier

10.0% 7.5% 5.0% 2.5% 0.0% -2.5% -5.0% -7.5%

-10.0% County U.S.

The county market was off 4.9% in 4Q `19. U.S. was down 4.1%.

Q1 '19 -6.2% -5.3%

Q2 '19 -5.9% -3.7%

Q3 '19 -5.1% 1.2%

Q4 '19* -4.9% -4.1%

* Figures for December of 2019 were estimated by Auto Outlook. Source: IHS.

County registrations were below the average for the previous five years in the Fourth Quarter of last year.

4Q '19*

35,739

4Q avg. ('14 to '18)

39,156

0

10,000 20,000 30,000 40,000 50,000

Quarterly new retail light vehicle registrations

* Figures for December of 2019 were estimated by Auto Outlook. Source: IHS.

MARKET TRACKER: COUNTY MARKET VERSUS U.S.

Toyota County Share Is 18.3% vs. 13.4% in U.S

San Diego Auto Outlook

Percent change in registrations 2019* vs. 2018

County Market -5.5%

Passenger car market share 2019*

39.2%

Domestic brand market share 2019*

27.0%

Top 10 brands and market share

2019*

First

Toyota

Second

Honda

Third

Ford

Fourth

Chevrolet

Fifth

Nissan

Sixth

Subaru

Seventh

Kia

Eighth

Tesla

Ninth

Hyundai

Tenth

BMW

18.3% 12.3%

8.4% 5.6% 5.5% 4.8% 4.2% 4.2% 3.8% 3.8%

*December 2019 figures estimated by Auto Outlook

U.S. Market -2.9% 27.8% 41.2%

Toyota Ford Chevrolet Honda Jeep Nissan Subaru Hyundai Kia Ram

13.4% 11.1% 10.9% 10.4%

5.7% 5.7% 4.7% 3.9% 3.8% 3.7%

Source: IHS

Covering Fourth Quarter 2019

Published by: Auto Outlook, Inc.

PO Box 390 Exton, PA 19341 Phone: 610-640-1233 EMail: jfoltz@ Editor: Jeffrey A. Foltz

Reproduction, including photocopying of this publication in whole or in part, is prohibited without the express permission of Auto Outlook, Inc. Any material quoted must be attributed to San Diego Auto Outlook, published by Auto Outlook, Inc. on behalf of the New Car Dealers Association San Diego County, and must also include the statement: "Data Source: IHS Markit." Unforeseen events may affect the forecast projections. Consequently, Auto Outlook is not responsible for management decisions based on the content of San Diego Auto Outlook

Copyright Auto Outlook, Inc., January 2020

At Auto Outlook, we strive to provide sound and accurate analyses and forecasts based upon the data available to us. However, our forecasts are derived from third-party data and contain a number of assumptions made by Auto Outlook and its management, including, without limitation, the accuracy of the data compiled. As a result, Auto Outlook can make no representation or warranty with respect to the accuracy or completeness of the data we provide or the forecasts or projections that we make based upon such data. Auto Outlook expressly disclaims any such warranties, and undue reliance should not be placed on any such data, forecasts, projections, or predictions. Auto Outlook undertakes no obligation to update or revise any predictions or forecasts, whether as a result of any new data, the occurrence of future events, or otherwise.

Covering Fourth Quarter 2019

Page 3

MARKET TRACKER: HYBRID AND ELECTRIC VEHICLES

Hybrid Vehicle Share Stays Above 6.0% in Third Quarter of 2019

Quarterly Alternative Powertrain Market Share (includes hybrid and electric vehicles)

Market Share

Hybrid, Plug In, & Electric vehicle

7.0%

market share in Q4 `19*:

6.0%

14.4%

5.0%

4.0%

3.0%

2.0%

1.0%

0.0%

Q1

Q2

Q3

Q4

Q1

Q2

Q3

Q4

Q1

Q2

Q3

Q4

17

17

17

17

18

18

18

18

19

19

19

19*

Hybrid

Plug In Hybrid

Electric

The graph above shows hybrid powertrain and electric vehicle quarterly market share in the county. *Fourth Quarter 2019 includes October and November. Figures include mild hybrid powertrains. Source: IHS.

MARKET TRACKER: THREE YEAR CHANGE IN SEGMENT SHARES

Non Luxury SUV Market Share Increases to 35%

Segment Market Shares in County YTD 2016 thru November

Non Luxury Md Size & Large Cars,

13%

Luxury SUVs, 8%

Luxury & Sports Cars, 10%

Non Luxury SUV Market Share, YTD `16:

26%

Non Luxury SUVs, 26%

Segment Market Shares in County YTD 2019 thru November

Non Luxury Md Size & Large Cars,

9%

Luxury SUVs, 11%

Non Luxury SUVs, 35%

Luxury & Sports Cars, 11%

Non Luxury SUV Market Share, YTD `19:

35%

Pickups and Vans, 14%

Small Cars, 29%

Pickups and Vans, 15%

Source: IHS. The two graphs above show market shares for primary segments during the first 11 months of 2016 and 2019.

Small Cars, 19%

Page 4

San Diego Auto Outlook

BRAND SCOREBOARD - PART ONE

Toyota, Tesla, Honda, & BMW Strong Performers in County Market

The graph below provides an indicator of brands that are popular in San Diego County (relative to the National standard), and those that are not. Here's how it works: For the top 30 selling brands, each brand's share of the U.S. market is multiplied by retail registrations in the county during 2019. This yields a "tar-

get" for the county market. Target registrations are subtracted from actual registrations to derive the measurement of sales performance.

Brands at the top of the graph (i.e., Toyota, Tesla, Honda, BMW, Mercedes, Lexus, and Mazda) are relatively strong sellers in the county, with

actual registrations exceeding calculated targets by large margins. For instance, Toyota registrations exceeded the target by 7,011 units.

San Diego County Retail Market Performance based on registrations for 2019* Actual registrations minus target (county industry registrations times U.S. market share)

7011

3960

2768

2145

1754

1687

1668

639

TOP FIVE PERFORMING BRANDS

595

1. Toyota 2. Tesla 3. Honda 4. BMW 5. Mercedes

566 553 526 236 152 146

111

1

-228

-292

-342

-443

-479

-522

-1032

-1496

-2603

-2992

-3347

-3894

-7421

-10,000

-5,000

0

5,000

Actual registrations minus target (county industry registrations times U.S. market share)

Toyota Tesla Honda BMW Mercedes Lexus Mazda Volkswagen Land Rover Audi Kia Porsche Infiniti MINI Volvo Subaru Acura Hyundai Nissan Chrysler Lincoln Mitsubishi Cadillac Dodge Buick Ram Jeep GMC Ford Chevrolet

10,000

*Figures for December, 2019 were estimated.

Source for registration data: IHS.

Covering Fourth Quarter 2019

BRAND SCOREBOARD - PART TWO

Ram and Porsche Had Largest Percent Gains in 2019

Page 5

The graph below shows the change in new retail light vehicle (combined car and light truck) registrations for all of 2019 versus a year earlier. Note figures for December of 2019 were estimated by Auto Outlook.

Seven brands had increases in 2019: Ram, Porsche, Tesla, Hyundai, Subaru, BMW, and Mercedes.

Percent Change in County New Retail Light Vehicle Registrations (Top 30 brands) - 2019* vs. 2018

40.0%

20.0%

Ram Porsche

Tesla Hyundai Subaru BMW Mercedes

0.0%

Lexus Land Rover

Volvo Toyota Volkswagen Kia Cadillac Lincoln Jeep Honda Mazda Dodge Audi Chevrolet Acura Nissan Ford GMC Buick Infiniti

-20.0%

Chrysler MINI

-40.0%

Mitsubishi

-60.0% *Figures for December, 2019 were estimated.

Source: IHS.

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